New Brunswick’s government-run cannabis retailer reported its second consecutive profitable quarter as sales ramped up during the pandemic.
On Wednesday, Cannabis NB said it recorded a profit of $1.4 million on record sales of $16.3 million for the first quarter ending June 28.
That’s continued progress for the provincial Crown corporation, which posted its first profit of $500,000 on sales of $14 million in the fiscal fourth quarter.
Read more: NB’s provinical pot shop posts first profit amid pandemic
Cannabis NB has been the sole legal cannabis retailer in the province since October 2018 with a 20-store operation to serve a population of about 775,000.
In its first five fiscal quarters, the provincial operator posted total losses of $17.3 million.
The poor financial results recorded the first year of legalization sparked the province late last year to consider selling the corporation to a private operator. In January, Cannabis NB narrowed the list of applicants down to eight companies which included Canopy Growth Corp. (TSX: WEED) and Fire & Flower Cannabis Co. (TSX: FAF).
Read more: New Brunswick moves to privatize provincial cannabis retail stores
But after Covid-19 reportedly slowed that initiative, the province said it buckled down to make the operation profitable on its own.
“Cannabis NB has made a very positive turnaround to date,” Cannabis NB CEO Patrick Parent said in a statement. “Starting the fiscal year off with a positive net income growth of over a million dollars is a direct result of aggressive cost cutting measures, renegotiating prices with our suppliers which were passed on to our customers as well the addition of weekly promotions.”
Despite the recent success, the province said it is still examining the proposals from private operators and will make a decision at the end of the summer, CBC reported.
Premier Blaine Higgs told reporters Wednesday that the province is weighing all factors such as whether the recent success is sustainable or mostly due to pantry loading during the pandemic.
The public retailer said that adjusted earnings before interest, taxes, depreciation and amortization grew by $3.5 million from the previous year. Positive cash flow was driven by an increase in gross profit of $2.4 million and a decrease in expenses of $1.1 million, it noted.
CEO Parent said offering a wider range of cannabis products at lower price points helped the provincial retailer compete with the unregulated market.
Statistics Canada reported in January that New Brunswick had the cheapest illicit cannabis at an average of $4.90 per gram, but the highest price for legal cannabis at $11.36 per gram.
Read more: Illicit pot market now 44% cheaper than legal industry: StatsCan
In the first quarter, store sales represented about 97 per cent of sales with the rest of transactions represented online, Cannabis NB said.
Cannabis concentrates continued to grow, making up 14 per cent of sales at $2.3 million, while edibles brought in $800,000 over the three-month fiscal period.
Top image via Organigram Holdings